Tag Archives: consumer
Residential rental prices up 2.5% in UK in 2015
Private rental prices paid by tenants in Great Britain rose by 2.5% in the 12 months to December 2015, according to the latest index from the Office of National Statistics. Private rental prices grew by 2.7% in England, 0.7% in Wales and 0.9% in Scotland with rental prices increasing the most in London at 3.9%. When London is excluded the national year on year growth is 1.8%. Some of the more detailed ONS figures show that since January 2011 England rental prices have increased more than those of Wales and Scotland. The annual rate of change for Wales continues to be below that of England and the Great Britain average. Rental growth in Scotland has slowed to 0.9% in the year to December 2015, from 2.1% in the year for the months of January through to June 2015. The index series for England starts in 2005. Private rental prices in England show three distinct periods: rental price increases from January 2006 until October 2009, rental price decreases from December 2009 to October 2010, and increasing rental prices from November 2010 onwards. Of these three periods, 2008 showed the largest rental price increases. When London is excluded, England shows a similar pattern but with slower rental price increases from around January 2011. Since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3% year on year, with December 2015 rental prices being 2.7% higher than December 2014 rental prices. Excluding London, England showed an increase of 1.9% for the same period. In the 12 months to December 2015, private rental prices increased in each of the nine English regions with the largest in London at 3.9% followed by the East at 2.8% and the South East also at 2.8%. Rental price increases have been stronger in London than the rest of England since November 2010. The rental market continued to show signs of strength overall in the fourth quarter of 2015 as prices increased by 2.5% in the year to December 2015 but this was a slowdown of 0.2% in the annual growth rate compared with September 2015. The ONS report says that this slowdown is partly driven by Scotland, where prices increased 0.9% in the year to December 2015, a fall of 0.7% compared with the annual growth rate in September 2015. It also points out that conditions in the housing market as a whole may have been supporting rental price growth. Data from the ONS house price index for November 2015 shows that house price growth has typically been stronger than rent price growth for a number of years. The Bank of England’s Agents’ Summary of Business Conditions for the fourth quarter of 2015 reported that private rental demand continued to grow steadily in the three months to December. Data from RICS’ Residential Market Survey for November 2015 confirmed this growth, noting that national tenant demand continued to grow in the three months to November 2015. The strength… Continue reading
US existing home sales fall after three months of growth
Following three straight months of gains, existing home sales in the United States dipped in August despite slowing price growth and a positive turnaround in the share of sales to first time buyers. Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co–ops, fell 4.8% to a seasonally adjusted annual rate of 5.31 million in August from a slight downward revision of 5.58 million in July. While none of the four major regions saw sales increase in August, the index report from the National Association of Realtors (NAR) says that sales have risen year on year for 11 consecutive months and are 6.2 % above a year ago. Lawrence Yun, NAR chief economist, explained that home sales in August lost some momentum to close out the summer. ‘Sales activity was down in many parts of the country last month, especially in the South and West, as the persistent summer theme of tight inventory levels likely deterred some buyers,’ he said. ‘The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year,’ he added. The index also shows that the median existing home price for all housing types in August was $228,700, which is 4.7% above August 2014 when it was $218,400. The market has now seen 42 months in a row of year on year gains. The report also shows that total housing inventory at the end of August rose 1.3% to 2.29 million existing homes available for sale, but is 1.7% lower than a year ago. Unsold inventory is at a 5.2 month supply at the current sales pace, up from 4.9 months in July. ‘With sales and overall demand higher than a year ago and supply mostly unchanged, low inventories will likely continue to limit options for those looking to buy this fall even with the overall pool of buyers shrinking because of seasonal factors,’ said Yun. The percent share of first time buyers rebounded to 32% in August, up from 28% in July and matching the highest share of the year set in May. A year ago, first time buyers represented 29% of all buyers. Yun believe that when the Federal Reserve decides to lift short term rates, which is expected later this year, the impact on mortgage rates and overall housing demand will likely not be pronounced. ‘With job growth holding steady, prospective buyers can handle any gradual rise in mortgage rates, especially if today's stronger labour market finally leads to a boost in wages and homebuilding accelerates to alleviate supply shortages and slow price growth in some markets,’ he added. NAR released a study earlier this month that examined new home construction in relation to job gains. The findings revealed that home building activity is currently insufficient in a majority of metro areas and is contributing to the ongoing housing shortages and unhealthy… Continue reading
Research suggest a million UK home owners heading for an interest only mortgage time bomb
Around a million home owners in the UK could end up seeing their home repossessed if they have no way of paying off their interest only mortgages, new research has found. It is estimated that some 934,000 people have interest only mortgages and do not have a plan on how to pay it off when their term ends, according to the research by consumer charity Citizens Advice. Time is running out for some people who will either have to sell their homes, find the capital to pay off the debt or could risk having the property repossessed, the Yougov poll found. Some of the people who came to the consumer champion said they were not made aware that they would need to repay the capital at the end of their term. The average shortfall was previously estimated to be £71,000. Overall there are around 3.3 million mortgage holders who have interest only products of which 1.7 million have no linked repayment vehicle, such as an endowment or ISA and 934,000 of these have no plan for repayment and 432,727 of these people have not even thought about how they will repay the capital. Rules were tightened in 2012 to ensure interest only mortgages were no longer available without a repayment plan, which has resulted in a major drop in the number of products sold. Citizens Advice supports this change, but says people who already hold these mortgages need more support. The charity is concerned that interest only mortgage holders do not have the same protections when their term ends than when mortgage holders fall into arrears. A protocol was launched three years ago which gives lenders a legal obligation to consider alternative options before starting possession action, including extending the length of a mortgage, changing the type of mortgage and giving people reasonable time to sell their property if necessary. But these protections do not apply to interest only mortgages at the end of the term which is at the very point when many customers discover they are in trouble. 'People buy a home for stability but interest only mortgages have forced many into a financial black hole. It is good rules around these mortgages have changed, but there are many people who previously took out these products and face losing their home,' said Gillian Guy, chief executive of Citizens Advice. 'Lenders have to exhaust all other options when borrowers get into arrears and it’s time to level the playing field so that interest only customers get the same protections when their mortgages mature. It is also important that people can get independent advice, guidance and support about how they can plan and manage their finances,' she added. The Financial Conduct Authority (FCA) has said that due to previous peaks in the sale of interest only mortgages, they expect there to be waves of potential repossessions from 2017 to 2018, from 2027 to 2028 and in 2032. In 2013 the FCA called on banks to contact all borrowers with interest only mortgages ending before 2020 about how they… Continue reading
